In this article, Faraz Eliyas Salat pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses laws that apply to a charitable trust in UAE.

Dubai melts vivid culture. It’s the crown of turbulent the Middle East. Uneasy lies the head that wear the crown. The UAE proudly displays its plurality. An atmosphere that encourages participation at a global scale by nourishing the multiple tenors of its social fabric, Dubai maintains its openness towards diversity. Cultures prosper only when there is surplus nourishment. Emiratis are a minority yet the balance of governance is undisturbed. The UAE is a peaceful country and like every other civilization, peace is an attainment through successive years of logical and thoughtfully conceived administration.

English dramatist Henry Fielding says, “A rich man without charity is a rogue; and perhaps it would be no difficult matter to prove that he is also a fool.” Charity is a necessity for civilization to elevate the downtrodden. The UAE doesn’t discourage charity but has laws in place only to organize the activity for the betterment of both the giver and the receiver.

Decree No. 9 of 2005, issued in the Emirate of Dubai, prohibits the act of collecting donations or advertisements to raise funds. These activities must necessarily obtain prior external approval from the relevant authority, which is the Islamic Affairs and Charitable Activities Department (IACAD). The Federal Ministry of Social Affairs (MoSA) regulates charitable activities and fund raising in the UAE. The relevant Emirates counterparts in each of the seven Emirates overviews charity and provide regulations in conformity with the federal laws. I’ll principally discuss the position in Dubai; however charity in other Emirates may slightly vary.

Key legislation on charitable trust in UAE

Emirate of Dubai has the below few legislations to regulate charitable activities –

• Federal Resolution No 8 of 1974 concerning Conditions for Licensing Societiesn for Public Benefits in Collecting Money (Federal Fund Raising Law)
• Federal Cabinet Resolution No 1 of 1977 concerning the Regulation of Work andn Social Affairs (Federal Social Affairs Law)
• Federal Law No 2 of 2008 concerning Public Welfare Associations andn Organisations (Federal Charity Law)
• Dubai Law No 2 of 2011 on the Department of Islamic Affairs and Charitablen Activities (IACAD Law)
• Dubai Law No 13 of 2011 on Organising Economic Activities in the Emirate ofn Dubai (Dubai Economic Activities Law)
• Dubai Executive Resolution No 26 of 2013 concerning Charities, Qurann Memorisation Centres and Islamic Foundations in the Emirate of Dubai (Dubai Charity Law)
• Decree No 9 of 2015 on the Organisation of Fund-raising in the Emirate of Dubai (Dubai Fund-raising Law)

Raising funds from natural or legal persons within or outside the UAE without a license is illegal under the provisions of the Federal Fund Raising Law. The following are the key things to be kept in hindsight to obtain a license –

• An association needs to register itself
• The term of the license cannot be more than three months

If the association extends its charitable activities in the Emirate of Dubai, particularly to collect donations, it needs to necessarily obtain a prior approval from IACAD. As such activities are strictly prohibited without a license from IACAD, and any person, group, or organization are prohibited from engaging in charitable activities without a license from IACAD in Dubai. The law has clearly set exemptions and penalties for the breach of law. The penalties can be either financial or criminal liability or both. The requirements to comply with IACAD are elaborate, and fund raising activities are to be necessarily conducted through a licensed charitable organization only. The IACAD website lists 19 such charitable organizations in Dubai.

How does the law define Charity?

Dubai Charity Law provides that charity is, ‘any sole proprietorship or a group of an organization entitled to continue for a definite or indefinite period, comprising of natural or legal persons, is concerned with religious or charitable affairs and engages its activity within the Emirate, including religious or charitable foundations and associations established or to be established by law or decree’.

The Federal Charity Law gives a more inclusive definition for ‘public welfare associations’ which are ‘any organized group… for the purpose of achieving social, religious, cultural, scientific, educational, professional, feminist, creative or artistic activity, providing humanitarian services, achieving benevolent aim or achieving its activities without attaining material benefits’.

Licensing requirement

Article 6 of the Dubai Economic Activities Law provides that any natural or legal person who intends to engage in any economic activity in Dubai include trade, services, commerce must obtain a license from Department of Economic Development (DED). There are several activities which need external approval, for instance you may need an external approval from Ministry of Sports if you want to set up a gym in Dubai. The grant of external approval is a prerequisite to obtain a license from DED. IACAD is the relevant body to grant an external approval to associations should they wish to raise funds from donations.

What are charitable activities?

There is no precise clarity on what constitutes a charitable act. However, IACAD provides that the following acts will be overseen by them –

• religious and charitable activities
• the collection of donations, in cash and in kind, and dispose of the same for human aid, orphan sponsorship, building mosques and any other type of aid
• relief campaigns and charitable events
• programs and projects launched by the charitable organizations either inside or outside the UAE

Understanding donation

Dubai Fund-raising Law provides that donation is ‘money given by the donator as a voluntary act, for the purpose of assistance and charitable activity, including Zakat and alms’. Article 3 of the same law clarifies further by prohibition of fund raising without written approval from the authority. The Dubai Fund raising law does not expressly prohibit individual or corporate donations to charities. It may interest us to observe the law only prohibits welfare associations from fund raising and donations. The IACAD views donations to include both money and other items such as clothes.

So what are the exceptions?

The Dubai Fund-raising Law provides that certain entities are allowed to receive donations without a prior approval. Article 3 (b) of the Law provides that members of the Federal and Dubai Government and government entities are exempt from the prohibition. This also includes ‘donations launched by the initiatives of His Highness the President of the State, his Deputy, members of the Federal Supreme Council and their Crown Princes and Deputies’.

Let us take a brief tour of the license application process

The application is elaborate and approval process is unclear, however the following is what the IACAD will review as per Article 6 of the Dubai Fund-raising Law –

• purpose of fund-raising
• names of person(s) authorised for fund-raising
• location(s) of fund-raising
• method of fund-raising
• suggested period of fund-raising
• the entity to which the donations will be sent
• specification of the amount to be collected
• any other data determined by the Department [IACAD]

The IACAD should under usual circumstances revert to you in 15 days, however they have not, it’s highly likely that the application is rejected.

Doing business in Dubai is divided between Mainland and Freezone. What are the provisions in Freezone?

Article 2 of the Dubai Fund raising Law goes further to include all special development zones and other free zones. This also includes the Dubai International Financial Centre, which has its own courts and laws.

Dubai Fund raising law doesn’t prohibit charity

The private act of donating to charity is not prohibited completely. Individuals are allowed to donate in their own right to any licensed charity or associations so long as these persons don’t solicit donations from other persons. Also, corporations can make donations too, however they are prohibited to raise fund from their employees, for instance writing emails to the employees.

Few of the leading charitable organizations registered in Dubai are

• Mohamed bin Rashid Charitable Humanitarian Foundation
• Al Maktoum Foundation
• Dar Al Ber Society
• Dubai Charity Association
• Beit Al Khair Society
• Al Shifa Charity Establishment
• DIB Foundation
• Dubai Foundation for Woman andn Children
• Emaar Foundation
• Red Crescent (Dubai)
• Al Barakah Charitable Society
• Easa Saleh Al Gurg Charity Foundation
• Mohammad Omar Bin Haider Charity Establishment
• Noor Dubai Foundation
• Dubai Care
• Emirates Airline Foundation
• Trahim Foundation
• Majid Al Futtaim Charity Foundation
• Khalaf Ahmad Al Habtoor Foundation

Comparing the UAE charity laws with that of other GCC countries

The laws on charities and fund raising in other Gulf Cooperation Council countries are similar to regulations in the UAE. Let us take Saudi Arabia, charity is an activity governed by the Fund raising for Charitable Purposes Regulations 1976. Ministry of Social Affairs of Saudi Arabia is tasked to regulate the activities and provide all persons who intend to engage in charitable fund-raising activity approval. These persons must obtain permission from the said ministry, which will oversee fund raising activities. There are other policies and procedures, which govern the books of charitable organizations. These laws are consistent with anti money laundering and combating terrorist financing laws.